ASSESSMENTS

Finland Re-Evaluates Its Eurozone Membership

Jul 18, 2012 | 11:03 GMT

Members of the Finnish government in Helsinki

RONI REKOMAA/AFP/Getty Images

Summary

Spain and Finland reached an agreement July 17 on the collateral Helsinki will receive in return for its participation in the bailout of Spanish banks. Finland is the only eurozone country that demands collateral — it previously made such demands when the second Greek bailout was negotiated in late 2011. Among eurozone members, Finland holds the most skeptical view of bailouts, and it is also showing its opposition to further eurozone integration measures. Helsinki decided to join the common currency after experiencing a deep recession in the early 1990s and introduced the euro as Finland's accounting currency in 1999. At the time Helsinki was seeking closer ties with Europe's core as a way to create distance from Russia.

Over the past decade the eurozone has fundamentally changed, and Finland finds itself in the uncomfortable position of being tied to southern European countries with which it has little in common. Since the outbreak of the crisis, Helsinki has felt increasingly ignored as the eurozone pushes through bailouts at a faster pace and as the currency union takes on a new structure that requires deeper integration and erodes national sovereignty. Although Finland will be re-evaluating its options outside the euro and would likely be the first country to leave the eurozone voluntarily, the country faces several challenges in doing so.

Changes within the eurozone are causing Helsinki to re-evaluate its place within the group....

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